Analysis of GECA’s Architects of Change 2025 roundtable: “Beyond Borders: Global Crowdfunding Passports – EU ECSPR Lessons Learnt”

Introduction

The promise of financial passporting -allowing licensed platforms to operate seamlessly across multiple jurisdictions – has captivated the equity crowdfunding industry since the European Union’s ECSPR created the world’s first large-scale implementation. Yet as practitioners from Europe, North America, and India gathered for GECA’s second Architects of Change roundtable, a more nuanced picture emerged. The discussion, moderated by Karsten Wenzlaff – one of the principal architects of the ECSPR framework – revealed that passporting success depends less on regulatory alignment and more on solving practical operational challenges that persist even within harmonized systems.

The urgency for global passporting solutions has intensified as financial systems become increasingly interconnected. The globalization of financing refers to the increased integration of national financial systems into international financial markets, characterized by greater cross-border capital flows, more diverse financial products, and the interconnectedness of financial institutions worldwide. This globalization brings potential benefits, such as more efficient capital allocation, higher returns for investors, increased competition, enhanced funding for innovation, and accelerated economic development across markets. However, realizing these benefits requires effective international regulatory cooperation to manage cross-border coordination challenges.

For equity crowdfunding, this global integration creates both opportunity and imperative. Investors increasingly expect access to worldwide opportunities, while entrepreneurs need capital sources that transcend domestic limitations. The conversation brought together three distinct perspectives: Benoit COLLAS from Enerfip Group, who has lived through the reality of ECSPR implementation; Aaron Shafton from DealMaker Securities, navigating the complex US-Canada relationship; and Honish Zaveri from Kiani Ventures, operating within India’s evolving regulatory landscape. Their experiences illuminate why passporting represents both the industry’s greatest opportunity and its most persistent challenge.

The ECSPR Reality Check: Harmonization Meets Operational Friction

Wenzlaff opened the discussion by acknowledging that passporting has gained “a lot of attention recently,” driven partly by the ECSPR’s theoretical promise of allowing platforms “to be licensed in one country and then offer to issuers to reach out to investors all across the European Union.” The reality, as Collas revealed, proves far more complex.

“Even if we have this nice paper saying everything is the same in the 20 plus countries of Europe, you really need to continue to check what is here in each country,” Collas explained, describing Enerfip’s expansion journey. The platform spent six months obtaining ECSPR licensing, expecting “with this harmonization to get everything easy, one process for Spain, France, Netherlands, whatever.” Instead, they discovered that “as soon as we really started operating in Spain, it’s totally different.”

This disconnect between regulatory theory and operational practice represents the first major insight from the passporting experiment. Legal harmonization creates the framework for cross-border operations but doesn’t eliminate the practical barriers that make such operations complex and costly.

Collas identified taxation as the most persistent barrier: “Each country remains with this initial regulation for taxation, and even with a nice crowdfunding agreement, nothing changed so far. People can invest everywhere, but us as a crowdfunding provider, we definitely need to educate them about boring tax documents that you need to fulfill.”

The taxation challenge illustrates a fundamental limitation of regulatory passporting: it operates at the securities regulation level but cannot address the broader ecosystem of laws that affect cross-border investment. Even within the world’s most advanced passporting system, investors must navigate different tax treatments, documentation requirements, and reporting obligations for each jurisdiction.

Wenzlaff’s Strategic Framework: From Regulatory Alignment to Principle-Based Supervision

Drawing on his experience architecting the ECSPR, Wenzlaff introduced a critical distinction that reframes the passporting debate. Rather than pursuing identical regulatory requirements across jurisdictions, he proposed “principle-based supervision” as a more pragmatic path forward.

“You might not have the same licensing requirements, but you would have a memorandum of understanding between two jurisdictions saying the licensing requirement for crowdfunding platform A is essentially the same as the licensing requirement in crowdfunding platform B,” Wenzlaff explained. This approach acknowledges that perfect regulatory alignment may be neither necessary nor achievable.

The principle-based supervision model offers several strategic advantages:

  1. Speed to Market: Bilateral agreements could enable cross-border operations faster than comprehensive multilateral frameworks.

  2. Regulatory Sovereignty: Jurisdictions maintain control over local variations while recognizing core competencies.

  3. Practical Focus: Emphasis shifts from perfect harmonization to functional equivalence.

  4. Incremental Progress: Success between compatible jurisdictions creates templates for broader adoption.

Wenzlaff’s insight challenges the prevailing assumption that passporting requires comprehensive regulatory harmonization. Instead, it suggests that mutual recognition based on shared principles could unlock many of the same benefits with lower political and practical barriers.

The North American Lesson: Why Geographic Proximity Doesn’t Guarantee Compatibility

Shafton’s perspective from North America provided perhaps the most compelling evidence that passporting challenges extend far beyond regulatory technicalities. Despite cultural similarities, extensive economic integration, and the transformative success of the US JOBS Act, cross-border crowdfunding between the US and Canada remains “shockingly complicated.”

“You can have Canadian companies listed on US stock exchanges that find it difficult to do US retail offerings” Shafton observed, highlighting a fundamental paradox: traditional capital markets integration doesn’t automatically translate to crowdfunding accessibility. This observation carries profound implications for global passporting ambitions, suggesting that even highly compatible jurisdictions face substantial barriers.

Shafton articulated the philosophical divide that underlies operational complexity: “There is a bit of a different, almost philosophical perspective in the US versus Europe on the way we think about securities regulations.” He explained how this manifests practically: “The outcome of that is that disclosures, requirements, formats are often like highly specific in nature, and the consequence of veering from that standard could be quite severe.”

This insight illuminates why technical compliance alignment must be accompanied by philosophical alignment about regulatory approach and enforcement. The North American experience reveals several persistent passporting challenges:

Documentation Fragmentation: “Even the accounting standards for the same company could be different” between the US and Canada, Shafton noted. Investors face “different forms to fill out from one province to another to invest in ultimately the same offering.” This fragmentation creates operational friction that persists despite shared economic frameworks.

Enforcement Philosophy Divergence: The difference between prescriptive European regulation and principles-based North American approaches creates uncertainty about compliance requirements and enforcement priorities, making cross-border operations risky even when technically permissible.

Jurisdictional Complexity: Within Canada alone, provincial regulations create additional layers of complexity. “The formats can be wildly different,” Shafton explained, describing how “all of these things are all tiny cuts that add up to the ultimate injury.”

Shafton’s analysis revealed the human cost of regulatory fragmentation: “An issuer without tons of resources and like a really driven mission isn’t going to conduct a cross-border offering.” This observation highlights how regulatory complexity doesn’t just create operational inefficiency – it systematically excludes smaller companies from accessing international capital.

However, Shafton also provided the strategic rationale for solving these challenges:

“At the end of the day, a founder who’s committed to raising capital from a community, from building a following, they’re gonna be mostly agnostic to where that following comes from.”

This insight captures the fundamental demand driving passporting development: entrepreneurs need capital and investors seek opportunities, regardless of arbitrary geographic boundaries.

Shafton’s perspective on standardization offered perhaps the most compelling argument for passporting development: “What the average investor, I believe, is looking for is probably pretty much identical between those two parties. Standardization, simplification, centralization like that is better for all parties. It reduces the burden on founders. It makes it more consistent for an investor to learn.”

This analysis suggests that the benefits of harmonization extend beyond operational efficiency to fundamental improvements in user experience and market access. As Shafton concluded:

“I hope we are trending on a global level to a standardized system. I think it benefits every single party along the way.”

The North American experience provides crucial lessons for global passporting development:

Philosophical Alignment: Technical regulatory compatibility must be accompanied by alignment in regulatory philosophy and enforcement approach.

Incremental Approach: Even between highly compatible jurisdictions, comprehensive harmonization faces substantial obstacles. Success may require incremental progress through specific use cases.

User Experience Focus: The ultimate justification for passporting lies not in regulatory efficiency but in improved experiences for entrepreneurs and investors.

Resource Requirements: Current complexity systematically excludes smaller players, suggesting that passporting could democratize access to international capital markets.

India’s Regulatory Evolution: The Passporting Prerequisite Challenge

Zaveri’s insights from India revealed a different passporting challenge: how to build cross-border frameworks when domestic frameworks remain underdeveloped. India lacks explicit equity crowdfunding regulation, operating instead through angel fund structures with high minimum investments around ₹2 lakh ($3,000).

More concerning for passporting advocates, Zaveri noted that Indian regulators are “going in the reverse direction” by implementing US-style accredited investor requirements. This shift creates particular challenges in the Indian context:

“Unfortunately, in India, there are very few accredited investors. Not many people actually want to do that because they don’t want to disclose their financial information.”

The Indian experience illuminates a prerequisite for successful passporting: domestic regulatory frameworks must achieve sufficient maturity and stability before international harmonization becomes viable. Attempting to build passporting agreements with jurisdictions undergoing regulatory contraction could undermine both domestic development and international cooperation.

However, Zaveri’s successful investment in US startups through platforms like AngelList demonstrates that individual cross-border participation is possible even without formal passporting agreements. This suggests that market demand for global access exists and could drive regulatory evolution if properly channeled.

The Platform Collaboration Conundrum: Why Business Models Matter More Than Regulations

One of the discussion’s most revealing insights emerged from Collas’s frank assessment of platform collaboration attempts. Despite regulatory frameworks that theoretically enable cooperation, most collaboration efforts fail due to business model conflicts rather than regulatory barriers.

“The real issue at the end is a fee split between platforms,” Collas revealed. “We were fighting and spending so much time on this question – oh, I’m doing the sourcing, I’m working more than you – we spend so much time negotiating for tiny amounts because everyone wanted to show what they were doing.”

This insight fundamentally challenges passporting assumptions. Even within harmonized regulatory environments, platforms struggle to collaborate because current business models assume competition rather than cooperation. The few successful collaborations emerged from “unexpected frameworks” that bypassed traditional revenue-sharing entirely.

Wenzlaff recognized this as a critical gap in current passporting approaches: “Maybe what we would need is simply as a first step, a framework which makes platform collaborations easier.” This observation suggests that regulatory passporting alone is insufficient – the industry needs collaboration frameworks that address business model alignment alongside regulatory compliance.

The platform collaboration challenge reveals a deeper structural issue: regulatory frameworks designed to protect individual market integrity may inadvertently hinder the cooperation necessary for global market integration. Successful passporting may require regulatory approaches that explicitly facilitate rather than merely permit cross-border collaboration.

The KYC Interoperability Problem: Where Principles Meet Practice

Wenzlaff identified Know Your Customer (KYC) requirements as a particularly intractable challenge for passporting implementation. “Even though they all use the same harmonized legal framework, there’s still quite some differences in what they actually do, what kind of information they’re being asked for,” he observed from European experience.

Zaveri confirmed this challenge from the Indian perspective:

“Those KYC requirements are not globally inter-interoperable. It’s difficult. It requires certain documents and all that – it’s difficult.”

The KYC challenge illustrates why principle-based supervision may be more complex than initially apparent. While the principle of investor verification remains consistent across jurisdictions, implementation varies significantly in terms of required documentation, verification methods, data retention requirements, and privacy protections.

This variation creates redundant verification processes that increase both friction and operational costs for cross-border operations. More importantly, it suggests that even principle-based passporting approaches may require more detailed coordination than regulatory frameworks typically provide.

Wenzlaff proposed a potential solution:

“You don’t prescribe a specific KYC requirement or a specific onboarding requirement, but you just say you want to have certain principles which are found in the regulation.”

This approach could enable KYC mutual recognition while preserving jurisdictional flexibility in implementation methods.

Market Demand Drives Innovation: Strong Fundamentals Support Optimism

The panel discussion revealed compelling evidence of genuine market demand that provides the economic foundation for passporting development. Shafton’s observations about North American markets illustrate this clearly:

“There’s no shortage of issuers we’ve spoken to – both local North American companies who want to expand internationally or who already have an international community or customer base, and they want to include them in a crowdfunding effort.”

This demand isn’t theoretical – it reflects real business needs from companies that already operate internationally but face artificial barriers accessing their global communities through crowdfunding platforms. As Shafton noted, “The US is obviously a huge market for retail investors and there are lots of foreign companies who are expanding their businesses in the US. Sometimes they go and list on US stock exchanges. They want that same approach when they’re doing these crowdfunding offerings.”

The investor appetite is equally strong. Wenzlaff’s scenario of “citizens who are maybe residents in Sweden and they would like to invest into a renewable energy project based in Uganda” captures this demand, but Zaveri’s personal experience provides concrete validation. His successful investment in a US startup through AngelList – which later achieved unicorn status – demonstrates that cross-border investment not only works but can generate substantial returns.

Regional Momentum Building Globally: The discussion revealed that passporting development isn’t limited to Europe but happening simultaneously across multiple regions. Wenzlaff noted that:

“in Africa, the African FinTech Network recently hosted a panel as well on how passporting for FinTech licenses can be made possible. Several legislators in Asia are also talking about this, recognizing each other’s licenses.”

Zaveri confirmed this with specific examples: “Especially in the ASEAN region, if there are syndicates, they do collaborate because they have similar kinds of regulations and principles.” This suggests that regional harmonization may provide stepping stones to global frameworks, with multiple pathways developing simultaneously rather than waiting for comprehensive global agreements.

Technology Infrastructure Ready: While technology alone can’t solve regulatory barriers, the infrastructure exists to support sophisticated cross-border compliance and KYC sharing. The discussion revealed that operational challenges like document sharing, language translation, and verification processes are technically solvable -the barriers are regulatory and business model related, not technological.

Climate Investment Catalyst: The renewable energy sector provides a politically supported catalyst for regulatory cooperation that transcends pure market efficiency arguments. Climate investment enjoys broad political backing, creating urgency around infrastructure investment timelines that could accelerate regulatory solutions. As Collas’s experience with renewable energy crowdfunding demonstrates, investor appetite for international climate projects already exists – regulatory frameworks just need to catch up.

The discussion revealed that regional harmonization may offer a more viable pathway to global passporting than comprehensive multilateral approaches.

This observation suggests that geographic and cultural proximity may facilitate the trust and institutional alignment necessary for effective passporting. Rather than pursuing global agreements immediately, the industry might achieve more success through regional clusters that can eventually interconnect.

Wenzlaff’s historical perspective supports this approach. He noted that both US and European crowdfunding harmonization “everything was quite fast” when there was political alignment and industry consensus. “If politicians see the need to collaborate and recognize each other’s licenses, it can happen if there is a big push from society about it.”

The regional pathway offers several advantages:

  • Cultural Compatibility: Shared values and institutional approaches reduce friction

  • Political Feasibility: Regional agreements typically face fewer sovereignty concerns

  • Economic Integration: Existing trade relationships provide frameworks for regulatory cooperation

  • Success Demonstration: Regional success creates templates for broader application

The Infrastructure Investment Driver: Climate Finance as Passporting Catalyst

Wenzlaff identified a compelling use case that could accelerate passporting development: cross-border climate investment. “We have citizens who are maybe residents in Sweden and they would like to invest into a renewable energy project based in Uganda,” he explained.

This scenario illustrates why passporting represents more than regulatory convenience – it’s becoming essential for addressing global investment challenges that transcend national boundaries. The scale of required infrastructure investment, particularly for climate transition, may create political pressure for regulatory cooperation that purely market-driven arguments cannot achieve.

Collas’s experience with renewable energy crowdfunding supports this thesis. Despite operational complexity, Enerfip’s cross-border expansion demonstrates market demand for international impact investment opportunities. The platform’s persistence through regulatory challenges suggests that underlying investor appetite justifies the coordination costs.

The climate investment driver could provide several strategic advantages for passporting advocates:

  • Political Support: Climate investment typically enjoys broad political backing

  • Urgency: Infrastructure investment timelines create pressure for regulatory solutions

  • Demonstration Value: Success in climate investment could prove broader passporting benefits

  • Scale Requirements: Global infrastructure needs exceed individual market capacity

Technology’s Role: Enabler, Not Solution

While technology received limited explicit discussion, the insights suggest an important distinction between technological capability and regulatory permission. Current technology could theoretically enable seamless cross-border investment experiences, but regulatory frameworks remain the binding constraint.

This observation challenges technology-first approaches to crowdfunding innovation. Blockchain, AI, and tokenization may improve operational efficiency, but they cannot address the fundamental regulatory fragmentation that constrains global market development.

The most promising technological applications appear to support regulatory compliance rather than circumvent it. For example, blockchain-based KYC data sharing protocols could enable mutual recognition while maintaining privacy protections and audit trails.

Wenzlaff’s principle-based supervision approach could particularly benefit from technological infrastructure that enables secure, privacy-compliant sharing of verification data across jurisdictions while allowing local implementation flexibility.

Market Timing and Strategic Windows

The discussion revealed interesting perspectives on the timeline for global passporting implementation. Collas suggested that comprehensive global harmonization “will be more 20 years,” while acknowledging ongoing work on specific collaborations that could succeed within “three months.”

This timeline disparity highlights the difference between comprehensive passporting and incremental progress through bilateral agreements and platform collaborations. While perfect global harmonization may indeed require decades, practical improvements in cross-border access could emerge much sooner through targeted initiatives.

Wenzlaff’s emphasis on political momentum suggests that timing depends heavily on external factors beyond industry control. “If a lot of investors would say, ‘Hey, we would like to support the climate transition in the global south,’ that would mean that maybe these kinds of frameworks would emerge eventually.”

The timing consideration has strategic implications for industry participants:

  • First-Mover Advantages: Early success in cross-border operations could create significant competitive moats

  • Investment Priorities: Long timeline for comprehensive harmonization suggests focus on incremental improvements

  • Political Engagement: Industry advocacy becomes crucial for accelerating regulatory cooperation

  • Implications for GECA’s Strategy

The roundtable discussion offers several strategic insights for GECA’s mission of promoting global crowdfunding harmonization:

Focus on Practical Barriers: Regulatory alignment alone won’t solve passporting challenges – operational issues like taxation and KYC interoperability require equal attention.

  • Facilitate Platform Collaboration: Business model alignment may be as important as regulatory compliance for successful cross-border operations.

  • Promote Principle-Based Recognition: Perfect harmonization may be neither necessary nor achievable – functional equivalence through mutual recognition offers a more pragmatic path.

  • Leverage Climate Investment: Renewable energy and infrastructure investment provide compelling use cases for regulatory cooperation.

  • Build Regional Clusters: Geographic and cultural proximity may facilitate trust-building necessary for effective passporting.

  • Address Regulatory Philosophy: Technical compliance alignment must be accompanied by philosophical alignment about regulatory approach and enforcement.

The Passporting Paradox Resolved

The discussion reveals a fundamental paradox in passporting development: the most advanced harmonization efforts create frameworks that highlight rather than eliminate the practical barriers to cross-border operations. The ECSPR experience demonstrates both the possibility and the limitations of regulatory coordination.

However, this paradox points toward resolution through Wenzlaff’s principle-based supervision approach. Rather than pursuing perfect harmonization, the industry can achieve many passporting benefits through mutual recognition frameworks that acknowledge both shared principles and local variations.

Success requires addressing three interconnected challenges:

  1. Regulatory Recognition: Developing mutual recognition frameworks based on shared principles rather than identical requirements

  2. Operational Harmonization: Solving practical barriers like taxation and KYC that persist even within harmonized regulatory frameworks

  3. Business Model Alignment: Creating collaboration frameworks that enable platform cooperation rather than just regulatory compliance

Conclusion: The Path Forward

The second GECA roundtable demonstrates that global crowdfunding passporting remains both necessary and achievable, but requires a more nuanced approach than simple regulatory harmonization. Wenzlaff’s insights, drawn from direct experience architecting the world’s most successful passporting system, provide a roadmap for practical progress.

The path forward involves building on existing successes while addressing revealed limitations. The ECSPR framework provides proof of concept for large-scale regulatory coordination, while North American and Indian experiences highlight both challenges and opportunities in different institutional contexts.

Most importantly, the discussion reveals that passporting success depends on industry participants actively shaping regulatory development rather than simply advocating for it. As Wenzlaff noted, rapid progress occurs “if politicians see the need to collaborate and recognize each other’s licenses” driven by societal demand.

The climate investment imperative may provide the catalytic pressure necessary to accelerate this development. Global infrastructure investment needs transcend individual market capacity and create compelling use cases for regulatory cooperation that purely market-efficiency arguments cannot achieve.

For GECA and its members, the challenge is translating these insights into coordinated action that addresses both regulatory and operational barriers while building the political momentum necessary for meaningful progress. The conversation continues, but the foundation for practical advancement is clear.

Ready to explore the full discussion? Watch the complete Architects of Change panel where industry leaders examine the future of global equity crowdfunding: Breaking Down Borders – Full Discussion

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